JAKARTA (Reuters) - Standard Chartered PLC's (>> Standard Chartered PLC) chief executive Peter Sands denied U.S. activist investor Muddy Waters' claim that the bank has taken on too much risk, saying its loan book was in a good condition and there is no change in risk appetite for lending.

Sands' comments came after Carson Block, the founder of Muddy Waters, told a conference earlier this month that he had bet against Standard Chartered's debt because he thought the market was underestimating the risk in the bank's loan portfolio.

"We're very comfortable with the quality of the book," Sands told reporters in the Indonesian capital Jakarta.

"We're always scrutinizing every aspect of the book. That's what we do as a risk manager ... but there's no change in risk appetite."

Block, whose company says it analyses the true worth of Chinese companies, argued that while Standard Chartered is diversified across emerging markets, a slowdown in China will lead to "considerable stress" at the lender.

Block was buying 5-year credit default swaps (CDS) for the bank, which is insurance against a default and yields a profit for buyers on any rise, a spokesman for the short seller said earlier this month.

One of Standard Chartered's loans that has drawn attention is the $1 billion borrowed by Indonesian coal miner PT Borneo Lumbung Energi (>> PT Borneo Lumbung Energy & Metal Tbk), controlled by Indonesian coal magnate Samin Tan. Tan borrowed the money in 2011 to buy a 23.8 percent stake in London-listed coal miner Bumi PLC (>> PT Bumi Resources Tbk).

"We have a very large asset book, $1 billion is an insignificant amount," Jaspal Singh Bindra, Chief Executive for Asia at the London-listed lender, said late on Thursday, without giving details of the total size of the bank's loan book.

"We remain very confident about the credit on that particular transaction."

Tan's investment plunged in value as Bumi's board was rattled by rifts between key shareholders, including British financier Nat Rothschild and Indonesia's influential Bakrie family.

A $1 billion investment made in 2011 is now worth around $224 million, based on Bumi's share price movements.

(Editing by Daniel Magnowski)

By Janeman Latul and Kanupriya Kapoor